Maxey v. American Cas. Co.

• Court: Virginia Supreme Court
• Writing for the Court: Hudgins, J.
• Citation: Maxey v. American Cas. Co., 180 Va. 285, 23 S.E.2d 221 (1942)
• Decision Date: 07 December 1942
• Docket Number: Record No. 2592.
• Parties: M. ANDERSON MAXEY, ET AL. v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA.

Page 285

180 Va. 285

M. ANDERSON MAXEY, ET AL. v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA.

Record No. 2592.

Supreme Court of Virginia, Richmond.

December 7, 1942.

Present, Campbell, C.J., and Holt, Hudgins, Gregory, Browning and Eggleston, JJ.

1. CONTRACTS — Interpretation and Construction — Pertinent Statute Part of Contract. — A pertinent statute is as much a part of a contract as if it were incorporated in it.

2. CONTRACTS — Interpretation and Construction — Laws in Existence Referred to. — Laws in existence are necessarily referred to in all contracts made under such laws.

3. INDEMNITY INSURANCE — Liability of Insurer — Automobile Operated by Person Other than Named Insured — With Permission — Effect of Code Section 4326a — Case at Bar. — The instant case was an action instituted by an insurance company to obtain a declaratory judgment on the liability of the insurance company under an automobile garage liability policy for the negligence of a third party while using an automobile owned by the insured, with his permission, on an independent venture. The policy was sold and became effective in June, 1940, but did not contain the omnibus coverage clause.

Held: That under the provisions of section 4326a of the Code of 1936, the policy covered the liability of any person using the car with the permission of the owner, whether the owner was liable or not.

Error to a judgment of the Circuit Court of Norfolk county. Hon. A. B. Carney, judge presiding.

The opinion states the case.

Leigh D. Williams, F. E. Kellam and Richard B. Kellam, for the plaintiffs in error.

Rixey & Rixey, for the defendant in error.

HUDGINS, J., delivered the opinion of the court.

Larry C. Briggs, trading as the Briggs Motor Company, gave M. Anderson Maxey express permission to use temporarily an automobile owned and used by Briggs in the conduct of his business. Maxey, while driving the automobile on business of his own, was involved in an accident that caused the death of D. A. Murphy. The administratrix of Murphy instituted an action for wrongful death and recovered a judgment for $8,000 against Maxey.

On June 21, 1940, Briggs purchased from the American Casualty Company an automobile garage liability policy, the coverage of which included the automobile involved in the accident. However, the policy did not contain the usual provision denoted "Omnibus Coverage Clause."

It is conceded that Briggs was not liable for Maxey's negligence. However, the administratrix made formal demand upon the American Casualty Company for the payment of the $8,000 judgment she had obtained against Maxey. The Casualty Company denied that it was liable under the policy. To settle the antagonistic assertions of the parties, the American Casualty Company instituted this action for the purpose of obtaining a declaratory judgment on the issues presented. The trial court decided that the policy did not cover the automobile when it was used with the permission of the owner by a third party on an independent venture. The administratrix obtained this writ of error to review that decision.

The determination of the case depends upon the construction of the 1934 amendment to section 4326a of Michie's Code of 1936. This amendment (see Acts 1934, p. 546) provides: "No such policy shall be issued or delivered in this State, to the owner of a motor vehicle, by any corporation or other insurer authorized to do business in this State, unless there shall be contained within such policy a provision insuring such owner against liability for damages for death or injuries to person or property resulting from negligence in the operation of such motor vehicle, in the business of such owner or otherwise, by any person legally using or operating the same with the permission, express or implied, of such owner."

While this court has had no occasion to construe the amendment, it, as a Virginia statute, has been construed by two other appellate courts. Thus, for the first time, we occupy the unique position of having the divergent views of two distinguished appellate courts to aid us in determining the true meaning of our own statute.

In Newton Employers Liability Assur. Corp., 107 F.(2d) 164, 166, decided by the Circuit Court of Appeals for the Fourth Circuit, it was held that a garage liability policy, under the provisions of the 1934 amendment, as quoted above, covered the liability of any person using the car with the permission of the owner, even though the facts disclosed that the owner was not personally liable for the loss sustained.

In Sears Maryland Cas. Co., 220 N.C. 9, 16 S.E.(2d) 419, decided by the Supreme Court of North Carolina, it was held that the purpose of the amendment to the statute was to protect the insured, that the statute did not convert a liability policy into a third party beneficiary contract, and that a third party could have no greater right under the contract than the insured. If the insured was not liable, then there was no liability under the provisions of the statute, which became a part of the policy. The views in the Newton case were considered by the Supreme Court of North Carolina and expressly rejected.

These divergent interpretations of the statute are the result of the doubtful meaning of the language used. The opinions of each of these courts are entitled to great weight and are usually persuasive. However, developments in Virginia, subsequent to the publication of the opinion in the Newton case, compel this court to adopt the views expressed in the opinion in that case. This brings us to the consideration of the determinative factors.

Judge Parker, speaking for the Circuit Court of Appeals for the Fourth Circuit and commenting on the Virginia statute in the Newton case, supra, said: "The case is narrowed, therefore, to an interpretation of the statutory provision above italicized, which has not as yet been interpreted by the courts of Virginia. It is argued that, since the statute requires that the policy contain a provision insuring the `owner against liability,' its language has no application to cases such as this where there is no liability on the part of the...